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East German border guards look through a hole in the Berlin wall after demonstrators pulled down one segment of the wall at Brandenburg gate Saturday, November 11, 1989.

Lionel Cironneau | AP

The most significant hopes and gains unlocked by the Berlin Wall’s fall, which was 30 years ago Saturday, are all at risk.

They included a historic expansion of democracies and open markets, a wave of globalization that created the greatest prosperity and largest global middle class the world has ever seen, and the enlargement the European Union, to 28 from 12 members, and NATO, to 29 from 16 – deepening ties among the world’s leading democracies.

That all brought with it the hope of what then-President George H.W. Bush called in 1989 “A Europe Whole and Free,” in which Russia could find its proper and peaceful place. Bush went even further in September 1990, after the UN Security Council had blessed the U.S.-led coalition’s war to free Kuwait from Iraqi invasion, envisioning a New World Order, “an era in which the nations of the world, East and West, North and South, can prosper and live in harmony.”

The idea had been hatched a month earlier by President Bush and General Brent Scowcroft, his national security adviser, while fishing near the president’s vacation home at Kennebunkport, Maine. They came home with three bluefish and an audacious vision that the Cold War’s end and the Persian Gulf Crisis presented a unique chance to build a global system against aggression “out of the collapse of the US-Soviet antagonisms,” in the words of General Scowcroft.

Reflecting on those heady days, Scowcroft recently told me that he felt everything he had worked for in his life was now at risk. If U.S. and European leaders don’t recover the common purpose they shared at that time – and there is yet little sign they will – this weekend’s Berlin Wall anniversary is more a moment for concern than celebration.

“Look at what is happening in the world,” French President Emmanuel Macron said in a freshly published interview in the Economist. “Things that were unthinkable five years ago. To be wearing ourselves out over Brexit, to have Europe finding it so difficult to move forward, to have an American ally turning its back on us so quickly on strategic issues; nobody would have believed this possible.”

This weekend’s 30th anniversary of the Berlin Wall’s fall provides a good moment to reflect on four reasons that event – one of freedom’s greatest historic triumphs – has failed to deliver on its full potential. Understanding that, might unlock a better path forward.

1. China’s authoritarian turn

Another thirtieth anniversary this year, the crushing of the Tiananmen Square protests in June 1989, might have had even more lasting consequences.

The regime’s attack on the pro-democracy movement, at a time when the Communist Party could have chosen greater liberalization over repression, ensured that the most important rising power of this century would be increasingly authoritarian in nature.

The lesson Beijing took from the Cold War’s end was that the Soviet Union had failed because it had liberalized its economy too little and its politics too much – a fatal combination. Economic liberalization and a growing Chinese middle class failed to bring with it the Western-style democratic freedoms that some thought would follow.

That doesn’t mean a New World Order can’t still be built with Beijing, but it will take considerable vision and patience to knit the two most important countries of our times together simultaneously, as strategic competitors and collaborators.

2. Revanchist Russia and the ‘Gray Zone Conflicts’

There’s a lot of finger pointing still about “who lost Russia” after the Cold War, whether it was Westerners who didn’t offer enough of an embrace or Russians who missed the opportunity.

Wherever you stand in that debate, the U.S. and its European allies failed to appreciate the potential or staying power of Putin, who has made it his life’s purpose to redress what he considered the biggest disaster of the 20th century, Soviet collapse.

At the same time, the enlargement of the European Union and NATO left behind a “gray zone” of 14 countries like Ukraine that were no longer in the Soviet bloc or Warsaw Pact but hadn’t been integrated into Western institutions.

French leader Macron has argued that it would be a huge mistake not to work to find more common ground with Russia. The difficulty is how to do so without selling out the democratic, sovereign hopes of Russia’s neighbors.

3. Europe’s lost momentum

Bill Emmott argues in Project Syndicate this week that the European Union’s biggest problem “is not Euroskepticism but indifference.”

He’s partially right: some 72% of French respondents in an opinion poll based on interviews with over 12,000 respondents across the 28 EU countries don’t think they would miss the EU as well as 67% of Italians and 60% of Germans.

That said, the EU also suffers from not having addressed design flaws that hobble it even as it has grown to its current size of 28 member states with 513 million citizens and a GDP of $18.756 trillion.

They include a monetary union without a fiscal union, immigration policies that allowed free movement inside the so-called Schengen Zone but too-porous external borders, and a failure to envision a world where the U.S. is losing interest, Russia remains a problem, and China is remaking global politics and economics.

Europe is “on the edge of a precipice,” Macron told the Economist. “If we don’t wake up … there’s a considerable risk that in the long run we will disappear geopolitically, or at least we will no longer be in control of our destiny. I believe that very deeply,” he stated.

4. The lack of U.S. vision and strategy

The Berlin Wall’s fall in 1989 – taken together with Soviet collapse and the Cold War’s end – marked an inflection point of history for U.S. leadership globally that one can compare to 1919, the end of World War I, and 1945, the end of World War II, in its potential historic consequences.

U.S. and European leaders failed after 1919 to prevent the rise of European fascism, and then the Holocaust and World War II. The US got it more right than wrong in 1945 after World War II, creating the institutions and principles that paved the way for one of the world’s most sustained periods of relative peace and prosperity.

In his 1989 “A Europe Whole and Free”, President H.W. Bush underscored how “too many in the West, Americans and Europeans alike, seem[ed] to have forgotten the lessons of our common heritage and how the world we know came to be. And that should not be, and that cannot be.”

Thirty years later, the jury is still out on what the post-Cold War period will bring, but none of the post-Cold War presidencies – from President Bill Clinton to President Donald Trump – have yet recognized the stakes or laid out a strategy commensurate to the risks.

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Longtime trader Louis Bacon to exit Moore Capital after 30-year run

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Louis Bacon, founder and CEO of Moore Capital Management

Amanda Gordon | Bloomberg | Getty Images

Longtime trader and hedge fund manager Louis Bacon is planning to return capital to investors after 30 years of investment.

The step to privatize Moore Capital will mark the end of a storied era at the firm and follows years of weaker performance at the fund.

“The time is propitious to take a step I have eyed for some time and ‘privatize’ our three multi manager flag ship funds — that is to say returning client assets,” Bacon wrote in a letter to clients viewed by CNBC.

“Disappointing results of these funds of the last few years obviously inform this decision but our long term record is one we remain proud of,” he continued. “Intense competition for trading talent coupled with client pressure on fees has led to a challenging business model for multi manager funds such as ours.”

Moore has delivered a net annualized return of 17.6% and a cumulative return of over 21,000% since inception for its flagship Remington funds but has returned low-single-digit gains this year, the manager noted.

Bacon, who founded Moore in 1989 with a $25,000 inheritance from his mother, is considered one of the most successful traders of his era. Bacon popularized trading on a “macro” basis, making bets on everything from U.S. equity to European bonds and Asian currencies based on what he expected from the global macroeconomy.

In Moore’s first full year, his wager that Saddam Hussein would invade Kuwait generated an 86% return, according to a letter Bacon wrote to document his firm’s first 20 years. The letter also said that 13 years later, Bacon’s accurate predictions on the market events surrounding the Iraq war would buoy fund returns 35%.

His fund also successfully bet against Japanese markets in the early 1990s and at one point managed more than $10 billion.

The most recent decade, however, proved tougher for Bacon, who scrambled to match his historical returns thanks to persistently low interest rates. A Moore fund managed by Bacon reportedly declined almost 6% in 2018 amid two spikes in market volatility; another company fund overseen by other managers fell 3.3%, according to the Financial Times, which first reported Moore’s impending closure.

“Challenging trading conditions and muted returns for our macro multimanager funds of late masks a vibrant success at Moore in our Long/Short Equity platform, our Private Equity and Venture group, our Real Estate and our Speciality Lending businesses,” Bacon wrote in the letter to investors.

But he isn’t the only fund manager who has struggled in recent years.

Billionaire Leon Cooperman announced the closure of his Omega Advisors in summer 2018, telling clients that he doesn’t “want to spend the rest of my life chasing the S&P 500.”

Fellow billionaire Jeffrey Vinik, who made a name for himself running Fidelity’s Magellan fund, told CNBC last month that he was closing his hedge fund less than one year since its relaunch.

“It has been much harder to raise money over the last several months than I anticipated,” Vinik said in a letter dated Wednesday to investors.

“The climate for raising long-short equity hedge fund assets has been far more difficult than I expected, and performance of the VAM funds, while good … has not provided the necessary momentum to bring in our desired level of investments.”

— CNBC’s Leslie Picker contributed reporting.

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Vietnam exporting more to US, but still isn’t a full China substitute

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A mechanic works at factory in Hanoi, Vietnam.

Chau Doan | LightRocket | Getty Images

Vietnam may have appeared to replaced China in selling certain goods to the U.S., but the Southeast Asian country still has a long way to go before it can fully substitute China as a manufacturing hub for the world.

In the first nine months of this year, U.S. imports from Vietnam jumped 34.8% year on year, accelerating from a 5.8% gain in all of 2018, according to a Thursday note by consultancy IHS Markit. In comparison, U.S. imports from mainland China shrank 13.4% year on year in the January-to-September period, the note said.

Tariffs were a major reason behind the decline in U.S. imports from China, said Michael Ryan, IHS Markit’s associate director of comparative industry service, who wrote the note.

He added that Vietnam’s fastest growing export categories to the U.S. are computers, telephone equipment and other machinery.

Those products were among the U.S.’s top imports from mainland China, Mongolia and Taiwan in 2018, according to the United States Trade Representative. That suggests that Vietnamese exports of those goods to the U.S. may have replaced the reduction in flows between China and America.

Challenges for Vietnam

Vietnam is often named as one of the largest beneficiary of the trade war because of an increase in its exports to the U.S. In addition, Southeast Asian country has seen a jump in foreign direct investments from manufacturers looking to circumvent elevated tariffs between the U.S. and China.

But the U.S. has not invested in Vietnam in a big way, noted Ryan. He pointed out that American investments into Vietnam only accounts for 2.7% of total FDI the Southeast Asian country received.

One reason is the U.S. doesn’t have a free trade agreement with Vietnam and the broader Association of Southeast Asian Nations, according to the IHS Markit report. But that’s just “one of many factors tempering the pace and magnitude of supply-chain diversification” into Vietnam, Ryan said.

Vietnam is also faced with a shortage in skilled labor, he said. The country’s talent pool has not been able to support the influx of inquiries, as many multinational companies are looking to relocate parts of their manufacturing supply chain outside of China, he explained.

“Simply, demand is outpacing the current ability to supply,” he said, adding that infrastructure in Vietnam is not yet up to standards for many international firms to establish shops.

Specifically, that means finding local business partners and fulfilling government requirements to obtain permits could be major obstacles for foreign companies, according to Ryan. In addition, Vietnamese roads were poorly built and ports are already congested, which add to the time needed to travel and move goods around, he said.

“Taken in combination, these factors are lengthening the delivery cycle to consumers and point to a drawn-out process of extricating operations from mainland China’s orbit,” said Ryan.

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WeWork lays off 2,400 employees

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A pedestrian walks by a WeWork office on October 07, 2019 in San Francisco, California. Days after withdrawing its registration for an initial public offering, WeWork also warned employees that the company could be set to lay off nearly 2,000 people, about 16 percent of its workforce.

Justin Sullivan | Getty Images

WeWork is laying off 2,400 employees as it works to cut costs and right-size the business, the company confirmed to CNBC.

In a statement, a WeWork spokesperson said the cuts were being made as part of the company’s efforts to “create a more efficient organization” and refocus on the core office-sharing business. The job reductions represent 19% of WeWork’s total workforce, which amounted to 12,500 employees as of June 30, according to an SEC filing.

“The process began weeks ago in regions around the world and continued this week in the U.S.,” the spokesperson said. “This workforce reduction affects approximately 2,400 employees globally, who will receive severance, continued benefits, and other forms of assistance to aid in their career transition. These are incredibly talented professionals and we are grateful for the important roles they have played in building WeWork over the last decade.”

Leading up to the announcement, reports of forthcoming job cuts had been circulating for weeks. The New York Times reported on Sunday that WeWork could cut at least 4,000 jobs across its core office-sharing business and some side ventures. In October, Marcelo Claure, WeWork’s new executive chairman, warned that layoffs would be on the way but didn’t say how many would be announced.

Claure said in a memo to employees earlier this week that the company will hold an all-hands meeting at 10 a.m. ET on Friday to address the changes slated for the company.

The layoffs come after several tumultuous months for WeWork. In September, the beleaguered start-up pulled its IPO filing after investors balked at its mounting losses and unusual corporate governance structure. The scrutiny forced WeWork co-founder Adam Neumann to step down from his role as CEO, with Sebastian Gunningham and Artie Minson stepping in as co-CEOs.

WeWork was poised to run out of money in a matter of weeks, but secured an 11th-hour bailout deal from SoftBank, its biggest investor. With a new owner in place, WeWork is expected to make sweeping changes to its business, including divesting noncore businesses and focusing on enterprise customers, instead of small and mid-sized clients. However, the company continues to bleed cash, reporting $1.25 billion in losses for the third quarter, widening sharply from the same period last year.

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